nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2022‒09‒26
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. The wage effects of employers' associations: A case study of the private schools sector By Martins, Pedro S.
  2. Material Incentives and Effort Choice: Evidence from an Online Experiment Across Countries By Elwyn Davies; Marcel Fafchamps
  3. Information and Communication Technology, Hierarchy, and Job Design By Gerten, Elisa; Beckmann, Michael; Kräkel, Matthias
  4. Migration and firm-level productivity By Richard Fabling; David C Maré; Philip Stevens
  5. International Assortative Matching in the European Labor Market By Thomas Peeters; Jan C. van Ours
  6. The UK Gender Pay Gap: Does Firm Size Matter? By Jones, Melanie; Kaya, Ezgi
  7. What Purpose Do Corporations Purport? Evidence from Letters to Shareholders By Rajan, Raghuram G.; Ramella, Pietro; Zingales, Luigi
  8. The Boss is Watching : How Monitoring Decisions Hurt Black Workers By Cavounidis, Costas; Lang, Kevin; Weinstein, Russell

  1. By: Martins, Pedro S.
    Abstract: Does employers' association (EA) membership affect the wages paid by firms? Such effects could follow from several channels, including increased productivity, different management practices, or employer collusion promoted by EA affiliation. We test these hypotheses drawing on detailed matched employer-employee panel data, including timevarying EA affiliation and worker mobility across firms. We consider the case of private schools in Portugal, 2010-2020, and its EA, and develop a methodology to delimit the sector's scope. We find that, even when controlling extensively for worker characteristics, including worker fixed effects, EA firms pay significantly higher wages. However, when controlling for firm fixed effects, these wage differences are significantly reduced or disappear. Our evidence indicates that the EA wage premium can be largely explained by the selection of high-wage firms (but not high-wage workers) into EA membership.
    Keywords: Employers organisations,Worker mobility,Social dialogue
    JEL: J53 J62 L40
    Date: 2022
  2. By: Elwyn Davies; Marcel Fafchamps
    Abstract: We conduct an interactive online experiment framed as an employment contract between employer and worker. Subjects from the US, India, and Africa are matched in pairs within and, in some cases, across countries. Employers make a one-period offer to a worker who can either decline or choose a high or low effort. The offer is restricted to be from a variable set of possible contracts: high and low fixed wage; bonus and malus contracts; and bonus and malus with reneging. High effort is always efficient. Self-interest predicts a fraction of observed choices, but many choices are better explained either by conditional reciprocity or by intrinsic motivation. Subjects from India and Africa are more likely to follow intrinsic motivation and they provide high effort more often. US subjects are more likely to follow self-interest and reach a less efficient outcome on average, but workers earn slightly more. We find no evidence that workers favor employers from some countries or that employers treat workers from different countries differently. Individual characteristics and stated attitudes toward worker incentives are unable to predict the behavioral differences observed between countries, thus allowing the possible existence of cultural differences in the response to labor incentives.
    JEL: D9 J31 O12 O57
    Date: 2022–08
  3. By: Gerten, Elisa (University of Cologne); Beckmann, Michael (University of Basel); Kräkel, Matthias (University of Bonn)
    Abstract: In recent decades, information and communication technology (ICT) has been associated with far-reaching changes in the design of jobs. However, it still remains unclear whether these changes will lead to more centralization or more decentralization in firms. Previous literature on this debate has focused on a strict dichotomy between the two possible directions. In contrast, our theoretical and empirical analyses show that equipping employees with ICT leads to both more centralized and more decentralized job-design policies. This finding is particularly pronounced for executive employees, who are granted more work autonomy but also experience more control via stronger monitoring, while non-executive employees only experience more monitoring without receiving more work autonomy. Our theoretical setting is based on a modified principal-agent model. In our empirical approach we apply estimation models that account for both endogeneity and essential heterogeneity, thereby exploiting exogenous geographic variation in our instrumental variable.
    Keywords: information and communication technology, centralization, decentralization, monitoring, working from home, marginal treatment effects, essential heterogeneity, instrumental variable
    JEL: D2 D86 J3 M1 M5
    Date: 2022–08
  4. By: Richard Fabling (Productivity Commission); David C Maré (Motu Research); Philip Stevens (Productivity Commission)
    Abstract: We use linked employer-employee microdata for New Zealand to examine the relationship between firm-level productivity, wages and workforce composition. Jointly estimating production functions and firm-level wage bill equations, we compare migrant workers with NZ-born workers, through the lens of a derived "productivity-wage gap" that captures the difference in relative contribution to output and the wage bill. Whether we look at all industries using a common production function, or separately estimate results for the five largest sectors, we find that skilled and long-term migrants make contributions to output that exceed moderately-skilled NZ-born workers, with that higher contribution likely being due to a mix of skill differences and/or effort which is largely reflected in higher wages. Conversely, migrants that are not on skilled visas are associated with lower output and lower wages than moderately-skilled NZ-born, also consistent with a skills/effort narrative. The share of employment for long-term migrants has grown over time (from 2005 to 2019) and we show that their relative contribution to output appears to be increasing over the same period. Finally, we present tentative evidence that high-skilled NZ-born workers make a stronger contribution to output when they work in firms with higher migrant shares, which is suggestive of complementarities between the two groups or, at least, positive mutual sorting of these groups into higher productivity firms.
    Keywords: Migrant labour, firm productivity, worker sorting, wage determinants, quality-adjusted labour input
    JEL: D24 J15 J31
    Date: 2022–07
  5. By: Thomas Peeters (Erasmus University Rotterdam); Jan C. van Ours (Erasmus University Rotterdam)
    Abstract: We investigate whether national borders within Europe hinder the assortative matching of workers to firms in a high skilled labor market. We characterize worker productivity as the ability to contribute to physical output and define firm productivity as the capacity to transform physical output into revenues. We rank workers and firms according to their individual productivity estimates and study the ensuing rank correlation to gauge the degree of assortative matching within and across countries. We find strong evidence for positive assortative matching at the national level, and even more so at the international level. This suggests national borders do not prevent workers and firm from pursuing profitable complementarities in production.
    Keywords: Assortative matching, international worker mobility, football managers
    JEL: M51 J63 J24 Z22
    Date: 2022–09–01
  6. By: Jones, Melanie; Kaya, Ezgi
    Abstract: Motivated by the introduction of the UK Gender Pay Gap Reporting legislation to large firms, defined as over 250 employees, we use linked employee-employer panel data from the Annual Survey of Hours and Earnings to explore pre-legislation variation in the gender pay gap by firm size. In doing so, we integrate two prominent but distinct empirical regularities in the labour economics literature, namely the gender pay gap and firm-size wage premium. We find evidence of both a larger raw and unexplained gender pay gap among large relative to smaller firms in the UK private sector even after controlling for unobserved worker heterogeneity, consistent with the legislation being effectively targeted. However, this conclusion changes after accounting for unobserved firm level heterogeneity and focusing on within-firm gender pay gaps. Large firms have smaller within-firm raw gender pay gaps and similar unexplained gender pay gaps when compared to smaller firms. We find that this conclusion is not specific to the current firm size threshold of 250 employees but holds more generally, including at proposed extensions of the legislation to smaller firms.
    Keywords: gender pay gap,firm-size wage premium,linked employee-employer panel data,pay transparency
    JEL: J31 J71 J78
    Date: 2022
  7. By: Rajan, Raghuram G.; Ramella, Pietro; Zingales, Luigi
    Abstract: Using natural language processing, we identify and categorize the corporate goals in the shareholder letters of the 150 largest companies in the United States, from 1955 to 2020. Corporate goals have proliferated during this period from an average of two in 1955 to almost 10 in 2020. We find a variety of factors are associated with a corporation stating a specific goal including advertising a firm's strengths, promising improved performance, signaling a commitment to specific constituencies, building societal legitimacy, and conforming to the behavior of other corporations. In spite of the proliferation of corporate goals, executive compensation is still overwhelmingly based on shareholder value, as measured by stock prices and financial performance. Yet, we do observe a rise in bonus payments made contingent on social and environmental objectives, especially among the signatories of the 2019 Business Roundtable statement on corporate purpose.
    Date: 2022
  8. By: Cavounidis, Costas (University of Warwick); Lang, Kevin (Boston University, NBER and IZA); Weinstein, Russell (University of Illinois at Urbana-Champaign and IZA)
    Abstract: African Americans face shorter employment durations than similar whites. We hypothesize that employers discriminate in acquiring or acting on ability-relevant information. In our model, monitoring black but not white workers is self-sustaining. New black hires were more likely red by previous employers after monitoring. This reduces firms' beliefs about ability, incentivizing discriminatory monitoring. We confirm our predictions that layoffs are initially higher for black than non-black workers but that they converge with seniority and decline more with AFQT for black workers. Two additional predictions, lower lifetime incomes and longer unemployment durations for black workers, have known empirical support.
    Date: 2022

This nep-hrm issue is ©2022 by Patrick Kampkötter. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.